Saturday 13 August 2016 04.59 EDT
First published on Friday 12 August 2016 15.05 EDT

Jeremy Corbyn’s leadership campaign suffered a setback on Thursday after an unexpected Court of Appeal victory for the party’s ruling body that will bar thousands of the leader’s supporters from voting.

Angry recriminations from Corbyn’s team followed the court’s decision, which will mean about 130,000 new members who joined less than six months ago will not be able to vote in the forthcoming poll between Corbyn and Owen Smith for the Labour leadership.

Corbyn’s campaign team openly attacked both the court of appeal judges and the party’s HQ for fighting the appeal, castigating the decision as wrong “both legally and democratically.” Shadow chancellor, John McDonnell, said lawyers had used “a grubby little device” to win the appeal.

But Paddy Lillis, chair of the Labour NEC, insisted the party had a right to defend its processes.

The ruling comes at the end of a stormy week for the party, with relations collapsing between Corbyn and his deputy Tom Watson after a public spat over the latter’s claims in the Guardian that the party was at risk of “Trotskyist entryists”. That was dismissed by Corbyn and then repeated by Watson who produced a document of far-left activists now involved in the party. The two leadership rivals, Corbyn and Smith, also clashed at a bitter hustings in Gateshead on Thursday, with Smith saying he would refuse to serve in a future shadow cabinet under Corbyn should his rival win the election.

On Friday there had been expectations the appeal by the NEC would most likely be rejected by the court

The NEC had originally said members who had joined after 12 January could not vote in the election, which the high court on Monday had said was a breach of contract law in a case brought by five new members, Christine Evangelou, Edward Leir, Hannah Fordham, Chris Granger and “FM”, a teenage member.

But in the court of appeal on Friday Lord Justice Beatson, sitting with Lady Justice Macur and Lord Justice Sales, overturned the decision and ruled that the NEC “has the power to set the criteria for members to be eligible to vote in the leadership election in the way that it did”.

Corbyn’s spokesman said lawyers had invoked “an obscure clause” in the Labour party rulebook, which could give the NEC powers to override election rules.

“In other words, this is a ‘make it up as you go along’ rule,” the campaign said. “We do not think that making it up as you go along is a reasonable way to conduct democracy in our party.”

McDonnell told the BBC: “I just find it shaming for a democratic party like ours, with a tradition of over a century of campaigning for democracy throughout our society ... We are now undermining the democracy of our own party.”

Though both Corbyn and Smith’s teams acknowledge the bulk of the new members now excluded are likely to be supporters of Corbyn, Smith’s camp were cautious not to overplay the significance of the result as being in their favour.

The campaign believes new members would have signed up convinced either way of who they would vote for and want to focus their efforts on longer-standing members and so-called “soft Corbynites” who joined prior to the 2015 election.

Around 50,000 new members excluded by the ruling are understood to have paid the additional £25 registered supporters fee to vote in the leadership election in any event.

The ruling will come as a relief for the Labour party’s general secretary Iain McNicol, who is widely considered to have risked his position in order to bring the appeal. “He has put his career on the line,” one senior Labour source said.

With many members angry at the expense of the appeal, though £30,000 will be recovered in costs, one Labour source speculated were Corbyn to win the leadership election, some members of a divided NEC could move for a vote of no confidence in McNicol.

Corbyn’s campaign team said: “Serious questions must be raised over why and how the NEC procedures committee brought this appeal. In doing so, it effectively risked new members’ money on an attempt to disenfranchise them. If we are to build a big, inclusive party to take on the Tories, we need to secure democracy in our party.”

Corbyn and others angry at the court of appeal judgment are unlikely to make concrete moves before the leadership election. Ballot papers will be sent out in the post and by email from next Monday, to be returned by 21 September, with the result announced at a special conference in Liverpool on 24 September.

The election has now involved six days in court – and just two leadership hustings between Corbyn and Smith – but permission to appeal to the supreme court was denied on Friday. An application could still be made directly by the appellants. Corbyn and Smith will next face off at a hustings in Nottingham next Wednesday.

Paddy Lillis, chair of the Labour NEC, said: “It was right that the party appealed the judgment, just as we would have appealed if the court in the previous case did not uphold the NEC decision that the incumbent leader of the Labour party did not require nominations.

“It is crucial to the Labour party that our governing body has the authority to debate, decide and implement the procedures, timetable and voting eligibility for our internal elections and selections.”

Edward Leir, one of the five new members who sued the party, said: “This case was always about fairness and inclusion, which won in the high court on Monday with a clear and firm judgment.

“It is a hugely disappointing result for me and probably for the 130,000 members similarly excluded. I am very grateful for everyone, including the 2,000 donors who have supported our fight over this matter so far.”

The court accepted that, in ordinary language, a “freeze date” could be retrospective. “A ‘freeze date’ for an election is simply the date by which a particular state of affairs must exist in order for a person to be eligible to vote. It necessarily will mean that some members have voting rights while others will not.

“We do not consider that there is anything in the ordinary meaning of the term which suggests that it can only be prospective.”